Upward Trends Continue for Health Clubs

BOSTON--Membership numbers have grown throughout the U.S. club industry, and revenue for the 12 leading health club groups has climbed, according to two recent reports.

As of January 2005, membership at U.S. health clubs had reached 41.3 million, an increase of 4.5 percent over the 39.4 million memberships reported the previous year, according to IHRSA’s Annual American Health Club Trend Report, which was released in early July by American Sports Data.

With these new numbers, the percentage of Americans over age 6 who belong to a health club has increased to 15.6 percent.

For-profit clubs still host the most members. For-profit fitness facilities serve 63.2 percent of members while nonprofit facilities serve 36.8 percent, according to American Sports Data. Of the nonprofits, the Y facilities have the biggest percentage of the population at 19.8 percent. University-based facilities and municipal-based facilities service 5 percent of the population each while military facilities service 2 percent. Another study conducted on IHRSA’s behalf found that the financial performance of the 12 largest health club companies improved in the first quarter of 2005 compared to the first quarter of 2004. The companies grew their total revenue an average of 4.3 percent to $13.2 million for the quarter, according to the survey, which was performed by Industry Insights Inc. The participating companies also reported improved same-store revenue for clubs that have been in operation for at least two years by an average of 3.9 percent to $11.5 million.

“The commercial health club industry typically shows growth during the first quarter as Americans begin their new year’s resolutions and make a commitment to get fit,” said John McCarthy, executive director of IHRSA. “The results from this recent survey show that clubs are steadily increasing membership accounts, total revenues, as well as keeping control of administrative expenses as indicated in double digit growth of EBITDAR (earnings before interest, taxes, depreciation, amortization and rent).”

The survey found that the average EBITDAR improved by 13.5 percent to $3.8 million. As a percentage of total revenue, EBITDAR was 28.7 percent of revenue for the first quarter of 2005 and 26.7 percent of revenue in 2004.